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For-Profit Education Whisper

For-Profit Education Whisper

Research Question: Are for-profit colleges poised for enrollment gains and an industry turnaround, or will ongoing enrollment improprieties and competition from non-profit schools continue to threaten the category?

Companies Covered: Apollo (APOL), DeVry (DV), Grand Canyon (LOPE), Bridgepoint (BPI), Strayer (STRA), Career Education (CECO), Education Management Corp. (EDMC), Corinthian Colleges (COCO)

Report Available: July 11, 2014


Blueshift’s initial research shows the for-profit education industry under continued enrollment pressure, though some schools are seeing gains in new student enrollment which may or may not be indicative of a forthcoming industry turnaround.



  1. The for-profit education industry, which makes up 13% of all students in higher education, continues to faces enrollment challenges, exemplified by a 4.9% decline in enrollment at four-year for-profit colleges, compared with a 2% increase in enrollment at four-year private nonprofit colleges. Most of the declines were from students 24 or older, typical targets for the for-profits, who were enticed by the improving job market. The threat of gainful employment regulation is also cause for concern among the for-profit colleges, who risk losing more students because of a rule that would deny federal student aid to schools where too many students default on their loans or where their debt is too high. Competition from private and public nonprofit schools continues to intensify as these schools keep offering less expensive online courses that dig into for-profit colleges’ main selling point. For instance, the University of Florida is expected to nearly double enrollment for its online offering one semester after launching the program.
  2. Enrollment trends at the for-profit colleges have been inconsistent, as some appear to be on the rise, while others are still lagging behind their high points of only several years ago. LOPE saw total enrollment increase 15% year-to-year in its Q1, while CECO reported new student enrollment increases of 3% year-to-year in its Q1 and sequential improvement for the last five quarters. DV has seen its traditional business, technology and management programs drop significantly, though its healthcare and medical schools had a 37% enrollment increase and 56% jump in new student enrollment in its Q3. STRA closed 20 underperforming campuses in the Midwest, but increased its online presence and had earnings and revenue ahead of Wall St. expectations. On the other hand, new student enrollment at APOL dropped 16.5% in its fiscal Q2 and overall enrollment dropped 17%. COCO’s new student enrollment declined 13% in its Q1 and is expected to drop 16% to 18% in Q4.
  3. Enrollment improprieties continue to dog the industry as BPI paid a $7.25 million settlement to Iowa’s attorney general over allegations of misleading and pressuring students to enroll, and will not disclose to students in writing that online degrees from its Ashford College of Education does not immediately grant a license in any state and it not accredited by three major teacher accreditation bodies. It is also restating 2013 financial statements because of errors related to revenue recognition. EDMC reached a $3.3 million settlement with the Colorado attorney general over allegations of misleading doctoral psychology students that they would be eligible to become licensed psychologists and accredited by the American Psychological Association when this was untrue. What’s more, a whistle-blower lawsuit against EDMC was allowed to proceed, whereby the school is accused of paying commissions to recruiters based on the number of new students they enrolled.
  4. Blueshift’s April 2013 report showed that enrollment at for-profit schools was not rebounding, as sources were less optimistic about an imminent recovery in enrollment than they were in Blueshift’s Oct. 2012 report, saying the recovery was taking longer than expected. For-profit schools were not responding urgently to changing industry dynamics and had not made adjustments to their price and programs. Public and private nonprofit schools were aggressively marketing to nontraditional students, for-profit schools’ primary target. These competitors offered a better-quality education at a significantly lower price, faster degree completion, and superior career services. Massive open online courses and competency-based education were becoming disruptive forces to for-profit online instruction. MOOCs were noted as easily accessible and respected as an academic entity.


To see other ideas Blueshift Research is currently working on, please click here.